Savita Oil Technologies Ltd. (SOTL) - Auditors Report

Company auditors report

To the Members of Savita Oil Technologies Limited Report on the Standalone FinancialStatements

We have audited the accompanying standalone financial statements of Savita OilTechnologies Limited which comprise the Balance sheet as at March 31 2016 Statementof Profit and Loss the Cash Flow Statement for the year then ended and a summary ofsignificant accounting policies and other explanatory information.

Managements Responsibility for the Financial Statements

The Companys Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparationand presentation of these financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014. This responsibility also includes maintenance of adequate accounting recordsin accordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditors Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Companyspreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of the accounting policies used and the reasonableness ofthe accounting estimates made by the Companys Directors as well as evaluating theoverall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2016 and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

Refer Note no. 28 regarding the payment of remuneration in excess of amount payable asper the provision of the Act to the Chairman and Managing Director aggregating to Rs.30.12 lacs for the financial year 2014-2015. The Company has already made an applicationto the Central Government seeking their approval to waive excess remuneration paid to theManaging Director. The approval from the Central Government is awaited. Our opinion is notmodified in respect of these matters.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of section 143(11) of theAct we give in the Annexure I a statement on the matters specified in paragraph 3 and 4of the Order to the extent applicable.

2. As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of accounts as required by law have been kept by theCompany so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of accounts. (d) In our opinionthe aforesaid standalone financial statements comply with the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.

(e) On the basis of the written representations received from the directors as on March31 2016 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2016 from being appointed as a director in terms of Section 164(2) of theAct.

(f) With respect to the adequacy of the Internal Financial Controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in Annexure II.

(g) With respect to the other matters to be included in the Auditors Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us: (i) TheCompany has disclosed the impact of pending litigation on its financial position in itsfinancial statements  Reference Note no. 33 to the financial statements.

(ii) The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts to the financial statements. (iii) There has been no delay intransferring amounts required to be transferred to the Investor Education and ProtectionFund by the Company.

For G. M. Kapadia & Co.

Chartered Accountants

Firms Registration No: 104767W

Rajen Ashar

Place : Mumbai

Partner

Dated : May 30 2016

Membership No: 048243

Requirements" of our report of even date

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. (b) As informed to us the fixedassets have been physically verified by the management during the year according to aphased programme. In our opinion such programme is reasonable having regard to the sizeof the Company and the nature of its assets. We have been further informed that nomaterial discrepancies were noticed on such verification by the management between thebook records and physical verification.

(c) According to the information and explanations given to us the title deeds ofimmovable properties as disclosed in Note no. 10 to the standalone financial statementsare held in the name of the Company except for the following:

Rs. in lacs

Particulars

No. of cases

Gross block as at 31 March 2016

Net block as at 31 March 2016

Remarks

Lease hold land

3

174.00

122.63

Title deeds not available for verification

(ii) The inventories have been physically verified at reasonable intervals by themanagement during the year. The discrepancies noticed on physical verification ascompared to the book records were not material and have been properly dealt with in thebooks of account.

(iii) The Company has not granted loans secured or unsecured to Companies FirmsLimited Liability partnerships or other parties covered in the register maintained undersection 189 of the Act. Hence the question of reporting under sub clauses (a) (b) &(c) of the clause 3(iii) of the Order does not arise.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 186 of the Act with respect toinvestments made. The Company has not granted any loans under section 185 provided anyguarantee or security. Hence the question of reporting under clause 3(iv) of the Orderdoes not arise.

(v) In our opinion and according to the information and explanations given to us theCompany has complied with the directives issued by the Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevant provisions of the Act and the rulesframed there under to the extent applicable. We are informed by the Management that noorder has been passed by the Company Law Board or National Company Law Tribunal or ReserveBank of India or any court or any other Tribunal in this regard. (vi) We have broadlyreviewed accounts and records maintained by the Company pursuant to rules made by theCentral Government for the maintenance of cost records under Section 148(1) of the Act inrespect of Companys products to which the said rules are made applicable and are ofthe opinion that prima facie the prescribed accounts and records have been made andmaintained. We have however not made a detailed examination of records with a view todetermine whether they are accurate.

(vii) (a) According to the information and explanations given to us and according tothe records of the Company examined by us in our opinion the Company is generallyregular in depositing with the appropriate authorities undisputed statutory dues includingProvident Fund Employees State Insurance Income-tax Sales Tax Service Tax dutyof Custom duty of Excise Value Added Tax Cess and any other statutory dues whereverapplicable.

According to the information and explanations given to us no undisputed amountspayable in respect of aforesaid dues were outstanding as at March 31 2016 for a period ofmore than 6 months from the date they became payable.

(b) The particulars of statutory dues that have not been deposited on account ofdisputes are given in Annexure A.

(viii) We have been informed that the Company has not defaulted in repayment of loansor borrowings to financial institutions banks and Government. The Company has not raisedany funds through debentures.

(ix) The Company has not raised money by way of initial public offer or further publicoffer (including debt instruments). According to the information and explanations given tous and on the basis of the records examined by us we state that the Company has appliedthe term loan for the purpose for which it was obtained.

(x) During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us no fraud on or by the companyhas been noticed or reported during the year by the Company.

(xi) The managerial remuneration has been paid in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act. Asstated in Note no. 28 and as stated in the Emphasis of Matter para of our main report thepayment of remuneration in excess of amount payable as per the provision of the Act to theManaging Director aggregating to Rs. 30.12 lacs for the financial year 2014-2015. TheCompany has already made an application to the Central Government seeking their approvalto waive excess remuneration paid to the Chairman and Managing Director. The approval fromthe Central Government is awaited.

(xii) The Company is not a chit fund or a Nidhi company. Hence the question ofreporting under clause 3(xii) of the Order does not arise.

(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company all transactions entered into by the Companywith the related parties are in compliance with Sections 177 and 188 of the Act whereapplicable and details of such transactions have been disclosed in the FinancialStatements as required by the applicable accounting standards; (xiv) The Company has notmade any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year.

(xv) The Company has not entered into any non-cash transactions with directors orpersons connected with him covered under the provisions of section 192 of the Act.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For G. M. Kapadia & Co.

Chartered Accountants

Firms Registration No: 104767W

Rajen Ashar

Place : Mumbai

Partner

Dated : May 30 2016

Membership No: 048243

Annexure II to our report of even date

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of SavitaOil Technologies Limited ("the Company") as of March 31 2016 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.

Managements Responsibility for Internal Financial Controls

The Companys management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to companys policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditors Responsibility

Our responsibility is to express an opinion on the Companys internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditors judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Companys internal financial controlssystem over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A Companys internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A companys internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompanys assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.